[1] Whether the transfer margin can be calculated by a separate method for land and buildings entered into a single sales contract (affirmative)

[2] In the case of paragraph (1), the amount of the tax and the method of calculating and comparing the gains from transfer

[1] Land and buildings are separate real estate subject to a disposition of imposition of capital gains tax, and even if land and buildings are acquired or transferred together, they can be calculated by separate methods, and thus, they do not necessarily need to be calculated on the basis of the same standard. Thus, in calculating gains on transfer on the ground that one party calculated gains on transfer based on the actual transaction price, such method does not necessarily have to be used in calculating gains on transfer.

[2] In a case where two or more assets are transferred or two or more assets are transferred in the same taxable year, the transfer income tax is not imposed by the number of transferred assets or the number of transferred assets, but by calculating one transfer income tax for all transferred assets, so in a case where both land and buildings are transferred at the same time, and losses from transfer margin and losses from transfer occur, the transfer income from the above land and buildings shall be the amount obtained by deducting the losses from transfer margin. Meanwhile, in a case where the transfer margin is to be calculated based on the standard market price, the tax amount calculated based on the above shall not exceed the scope of the transfer margin based on the actual transaction price under the principle of no taxation without law or prohibition against excessive taxation under the Constitution. In light of the above legal principles, even in a case where two or more assets are transferred or two or more assets are transferred in the same taxable year, the single tax amount shall be calculated by calculating the transfer margin or the losses from transfer, and such tax amount shall be determined in excess of the scope of the actual transaction price by comparing the amount calculated by calculating the transfer margin or the losses from the actual transaction price.

[1] Articles 23(4) (see current Article 96), 45(1)1 (see current Article 97(1)1) of the former Income Tax Act (Amended by Act No. 4661, Dec. 31, 1993); Article 170(4)3 (see current Article 166(4)3) of the former Income Tax Act (Amended by Presidential Decree No. 14083, Dec. 31, 1993); Article 59 of the Constitution of the Republic of Korea; Article 14(2) of the Framework Act on National Taxes; Articles 7(2) and 23(4) (see current Article 96); Article 45(1)1 (see current Article 97(1)1); Article 170(4)3 (see current Article 166(4)3) of the former Income Tax Act (Amended by Act No. 4661, Dec. 31, 1993); Article 170(3)4(1)1)3) of the former Income Tax Act;

[2] Supreme Court Decision 85Nu205 delivered on June 25, 1985 (Gong1985, 1073), Supreme Court Decision 86Nu617 delivered on February 9, 198 (Gong1988, 522), Supreme Court Decision 91Nu865 delivered on May 24, 1991 (Gong1991, 177), Supreme Court Decision 96Nu4022 delivered on December 10, 1996 (Gong197Sang, 424), Supreme Court Decision 96Nu860 delivered on February 11, 197 (Gong197Sang, 805), Supreme Court Decision 95Nu17907 delivered on March 28, 197 (Gong1997, 197)

Plaintiff (Attorney Lee Im-soo et al., Counsel for plaintiff-appellant)

Head of the Tax Office

Seoul High Court Decision 96Gu12469 delivered on June 18, 1997

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

1. On the first and second grounds for appeal

The provisions of Articles 23(4) and 45(1)1 of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993; hereinafter the same shall apply) and Article 170(4)3 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14083 of Dec. 31, 1993) declared the principle of the standard market price in calculating gains from transfer when assets are transferred. According to the above provisions, where assets are transferred without a preliminary return or final return on transfer of assets, or there is no evidentiary document proving the actual transaction price, or where it is confirmed that only one of the acquisition value or transfer value by the documentary evidence submitted, the transfer gains cannot be calculated based on the standard market price, and even if the actual transaction price is confirmed later, it is prepared in the form of a false document, and thus, the government office that has jurisdiction over the imposition of transfer income tax can not be deemed to have been issued with a return of the same documentary evidence.

According to the reasoning of the judgment below, the court below held that the construction contract document (No. B.7) submitted by the plaintiff as documentary evidence of acquisition value based on the actual transaction price of the building in its judgment (hereinafter "building in this case") shall not be deemed as a documentary evidence since it was falsely prepared, and that the plaintiff submitted documentary evidence as stated in its judgment to the head of the Songpa District Tax Office while filing an application for the refund of value-added tax, and the jurisdiction of the plaintiff cannot be deemed as a submission of documentary evidence of acquisition value based on the actual transaction price of the building in this case to the defendant who is entirely different from the jurisdiction of the defendant. In light of the records, the court below's fact-finding and judgment are justified and

All of the grounds for appeal on this point cannot be accepted.

2. On the third ground for appeal

Land and buildings are separate real estate subject to a disposition of imposition of capital gains tax, and even if land and buildings are acquired or transferred together, they can be calculated by separate methods, and they do not necessarily need to be calculated on the basis of the same standard. Thus, in calculating gains on transfer by one party on the basis that one party calculated gains on transfer according to the actual transaction price, such methods shall not be necessarily used in calculating gains on transfer.

In the same purport, the court below is just in calculating the transfer margin on the building of this case based on the standard market price and in calculating the transfer margin on the land in its holding (hereinafter referred to as the "land in this case"), and there is no error in the misapprehension of legal principles as to the criteria for calculating the transfer margin.

In addition, where two or more assets are transferred or two or more assets are transferred in the same taxable year, the transfer income tax should be calculated and imposed on all transferred assets, not by calculating the transfer margin by the number of transferred assets or the number of transferred assets (see, e.g., Supreme Court Decisions 86Nu617, Feb. 9, 198; 91Nu865, May 24, 1991). If transfer margin and losses from transfer occur in the simultaneous transfer of land and buildings, respectively, the transfer income from the above land and buildings shall be the amount obtained by deducting transfer marginal profits from the transfer margin (see, e.g., Supreme Court Decision 85Nu205, Jun. 25, 1985). Meanwhile, in cases where transfer margin should be calculated based on the standard market price, it shall be determined separately from the actual transfer margin calculated based on the principle of no taxation without law or prohibition against excessive taxation under the Constitution.

According to the reasoning of the judgment below, the court below held that the transfer income tax on the transfer of the building of this case cannot be imposed on the ground that the actual acquisition value of the land of this case is 420,000,000 won and the actual transfer value is 735,912,000 won and the actual transfer value is 735,912,00,000 won, based on the actual transaction value, the transfer income tax shall be determined as 111,238,850 won, and the actual acquisition value of the building of this case shall be calculated on the basis of the standard market price for the building of this case, but the actual acquisition value of the building of this case is 729,79,45 won and 614,08,000 won and it was merely 614,08,000 won for the reason that there was no transfer margin. The court below erred in the misapprehension of legal principles as seen earlier as to the calculation of transfer income

However, while recognizing the fact that transfer margin has arisen from the transfer of the building of this case in accordance with the standard market price, the court below calculated transfer income tax for the transfer of the land of this case and the building of this case based only on the transfer margin without considering the transfer margin, which would rather result in a favorable outcome to the plaintiff. Meanwhile, even according to the facts duly confirmed by the court below, in the case of actual transaction price, the transfer margin on the land of this case is 312,453,895 won, and the transfer margin on the building of this case is 115,711,455 won, and the transfer margin on the building of this case is 115,711,455 won (gold 729,79,49,4550 won - 614,08,000 won). Thus, the transfer margin on the land of this case and the building of this case is 196,742,440 won (gold 312,895 won -15,1514,715).15

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the plaintiff-Appellant. It is so decided as per Disposition by the assent of all Justices who reviewed the appeal.

Justices Park Jong-chul (Presiding Justice)